(Yicai Global) Oct. 22 -- Shares of Red Star Macalline Group, China’s leading furniture mall operator, rose after its second-largest shareholder, e-commerce titan Alibaba Group Holding, raised its stake in the company through a non-public offering.

After surging by as much as 8 percent in Shanghai earlier today, Red Star Macalline [SHA:601828] ended 2.1 percent higher at CNY9.74 (USD1.52). Its Hong Kong-listed stock [HKG:1528] gained 5.4 percent to HKD4.67 (60 US cents).

Red Star Macalline has completed a CNY3.7 billion (USD578.7 million) private placement of shares, with Alibaba contributing CNY350 million, or about 0.98 percent of the total post-issue share capital, the Shanghai-based furniture retailer said in a statement yesterday.

The company issued 449.7 million shares to 17 investors, mostly professional investment institutions with the exception of Alibaba, priced at CNY8.23 (USD1.29) each. Shanghai-based Caitong Fund Management bought the most, at about CNY538 million.

Red Star Macalline Holding Group remains Red Star Macalline’s biggest shareholder after the funding, but its stake fell to 61.7 percent from 68.81 percent. Alibaba now owns 13 percent. Its owned about 12.46 percent of Red Star at the end of June, according to the furniture retailer’s semi-annual earnings report.

Red Star Macalline first disclosed the private funding plan in June last year. About CNY1.7 billion of the money raised was to be used to build furniture malls and about CNY220 million for a collaborative internet-related home decoration project with Hangzhou-based Alibaba.

The rest of the funds were to go to developing a new-generation home improvement platform and system as well as toward paying the company’s interest-bearing debt.

Alibaba became Red Star Macalline’s No. 2 shareholder in 2019 by subscribing to convertible bonds and buying its Hong Kong-listed shares.

Editor: Peter Thomas